His Excellency Sheikh Ahmed Zaki Yamani is used to giving warnings to the West about the affairs of the Middle East. The man who, as Saudi Arabia's oil minister, acted as the chief intermediary between the Organisation of Petroleum Exporting Countries and the energy-hungry developed economies throughout the crises of the Seventies and Eighties, is warning us again.

But, with one clear exception - the Palestinian question - Yamani uses the code of moderate language, which reflects the still-moderate position of his native Saudi Arabia in the volatile Middle East, a position that he believes is vital to western, if not global, interests.

Yamani remains a key figure in the Saudi network - his connections in industry, politics and oil are ubiquitous - he is close to the Royal family, and he was once lawyer to the construction millionaire father of Osama bin Laden.

As he talks to The Observer at the Wimbledon base of his al-Furqan Islamic heritage foundation, the issue of patience, or the lack of it, underlies his conversation.

On (almost punctual) arrival, one of his staff cautions: 'Go straight in, he has been here half an hour and is losing patience.'

You would have guessed no irritation in the civility of his greeting. He promises a half-hour interview. After an hour, he has warned that his patience is running out with Opec, as is Saudi Arabia's; that friendly Arab states are being patient with America, but that their forbearance cannot be guaranteed forever; and that underlying the current terrorist-triggered crisis lies an issue that has stretched his patience to the full - Palestine.

He starts with oil.

Since the 11 September atrocities, markets have swung frenziedly, bursting through $30 a barrel in the aftermath on fears of US reprisals, then touching $20 last week as worries of recession came to the fore.

Yamani, also chairman of the London-based Centre for Global Energy Studies, prefers to separate economic and political issues, so far as that is possible, which, he concedes, is not often.

'If you look at the fundamentals, the supply and demand picture, recession is already with us and it is going to be much deeper. Demand is going to slow; we even think demand for 2001 compared with last year will be flat.

'With the crime committed in New York, many areas of consumption have dropped.' Demand for jet fuel, for example, may fall by 400,000 barrels per day (bpd) by the year's end.

Against this background Yamani can scarcely conceal his irritation at Opec. Last week the cartel agreed not to shore up the price with a fourth cut to supply this year, leaving production at 23.2 million bpd, despite the oil price falling below its self-imposed $22 to $28 target range.

He accepts Opec is in a difficult position: 'Inside Opec they can't cut production officially because of the world-wide recession. Politically it is very difficult for them. There is no justification.'

But he adds: 'The Opec countries, most of them, are overproducing, above the quotas assigned to them. There is a total of 800,000 barrels [of overproduction] a day - there are those who think it is more than 800,000.'

While Opec, led very publicly by Saudi Arabia, has said that in the interest of the world economy it will act to prevent price rises in such turbulent times, Yamani is exasperated that overproduction is acting against the interests of Saudi Arabia and other moderate states.

There are several countries he points to - Nigeria, Iran, Libya - that will produce 'to the last drop'.

And he says the situation will become worse next year.

'You will have from Venezuela another 400,000 barrels by the end of this year, and other countries are increasing their capacity. The oil, if it comes to the market, on top of what we already have, on top of what Opec is going to put in - prices will not be high.'

In the longer term he has concerns over growth in non-Opec production weakening the cartel's position further. Yamani believes - without a widespread war - the price will fall below $20, and that Opec will have to abandon its target range.

He also points out that very low prices are not welcomed by the US, which has the interests of its oil majors - close to President Bush's heart - to consider.

'But', he adds, 'so much depends on political factors. There are many variables - military action, interruption in the supply of oil. We hear that Iraq may be targeted. Now, if that is a fact, the attacks will remove Iraqi production [2.8 million bpd, of which 2.2 million is exported]. There could be knock-on effects.' Under such circumstances we could be looking at $30 a barrel or above.

Here Saudi Arabia's position becomes vital. Western markets have mitigated the fear of production cuts because they believe the kingdom, with its huge reserves, will ride to the rescue, with Kuwait and the United Arab Emirates in tow.

Yamani seeks to moderate that view. There are several pressures on Saudi Arabia.

The first is Opec over-production and the negative impact this has on Saudi Arabia's revenues and interests.

Second is its importance to the US and West, militarily - troops are based there - and economically, thanks to its influence in Opec.

As far as Opec overproduction is concerned, there is, in Yamani's view, a precedent - 1985 - when oversupply was forcing down the price. 'Then Saudi Arabia was carrying the burden. This is now too much. There will come a point where Saudi Arabia will not carry the burden [and cut production, as it eventually did in 1985] . Some time in the future that will be repeated.'

He concedes the problems a Saudi cut in production would cause on market sentiment and the oil price - which could rocket - could also cause political difficulties. But he believes a cut will happen, although if Iraq was attacked, and its production stemmed, Saudi Arabia could be spared the difficulty. His comments come as Saudi Oil Minister Ali al-Naimi hinted that Opec could cut production, taking a more hawkish view than fellow states.

But it is the third factor - relations between the Saudi government, its neighbours, and even its own people - that is being stretched by the problems in Opec and the building of a US-backed coalition.

Sheikh Yamani stresses that, although it has been friendly to the West, Saudi Arabia remains an Islamic nation. 'It is the guardian of the two holy places. That is extremely important for the whole world. Islam in Saudi Arabia is a strong ideology. When we deal with ideology, we have to be very careful.

'Saudi Arabia is extremely important for everything. The world economy will collapse if something happens there.' Such as? Yamani is cryptic, hinting at discontent among Saudis over their government's support for America. 'I don't want, from one side, the cause of the bitterness to increase. On the other side, if the government goes ahead with the coalition, the gap between the people and the government will be very big. This is not a sign of stability.'

Nowhere, in the Sheikh's view, is the West's misunderstanding about the Middle East demonstrated more clearly than over Palestine. And this is where his moderation drops away.

'So much depends on what the Americans will do. To what extent will Sharon [the Israeli prime minister] be given a free hand to do what he wants, or will they try to stop it? The Americans don't go to the heart of the matter. All they wanted was a meeting between Arafat [the Palestinian leader] and Peres [the Israeli foreign minister]. The meeting does not mean much. The Palestinians are starving to death, they are isolated in pockets. What do you expect from these people? This is occupied territory. International law says they must withdraw, but they build settlements. That is a crime of war. This is the problem you must solve. This is the cause of terrorism.'

And Yamani is only too aware that it is a Saudi who is the prime suspect for the US bombings. As a matter of fact, he says, he knows the bin Laden family well. 'I was a close friend of the father. I was his lawyer for some time a long time ago. I know most of the sons - he produced 53.

'But like in any family you don't have identical members. Osama went to Afghanistan, He was trained by the CIA, and financed by Saudi money also to help the mujahideen.'

For his part, he thinks bin Laden - who he says is not that clever - was unlikely to have been behind the attacks, though he may have financed them. But, he repeats: 'He is the product of the CIA.'

Unrepentant language. Inflammatory, even. The question in his mind, however, is whether the complicated events surrounding oil, politics and war will combine to create more Osamas in Saudi Arabia and beyond. The ball is in America's court.